UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q
                                   (Mark One)

          [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2009

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
              OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from ______ to ______

                          Commission File No. 0 - 20660

                               DIRECT INSITE CORP.
             (Exact name of registrant as specified in its charter)

              Delaware                                   11-2895590
   (State or other jurisdiction of                    (I.R.S. Employer
   incorporation or organization)                    Identification No.)

                      80 Orville Drive, Bohemia, N.Y. 11716
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (631) 873-2900

Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                         Yes   [X]          No [  ]

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted  and posted  pursuant to Rule 405 of  Regulation  S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).

                         Yes [  ]           No  [  ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
the definitions of "large accelerated filer",  "accelerated filer", and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

    Large accelerated filer [ ]              Accelerated filer [ ]

    Non-accelerated filer [ ]                Smaller reporting company [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

The number of shares of $.0001 par value  stock  outstanding  as of May 10, 2009
was: 10,686,739.
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                                              Page

     Item 1. Financial Statements.

<S>  <C>                                                                                                  <C>
     Condensed Consolidated Balance Sheets as of March 31, 2009 (Unaudited) and
       December 31, 2008 .................................................................................    3
     Condensed Consolidated Statements of Income
       For the Three Months Ended March 31, 2009 and 2008 (Unaudited).....................................    4

     Condensed Consolidated Statements of Cash Flows
       For the Three Months Ended March 31, 2009 and 2008 (Unaudited).....................................    5

     Notes to Condensed Consolidated Financial Statements (Unaudited) ....................................    6

      Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ......   14

      Item 3. Quantitative and Qualitative Disclosure About Market Risk....................................  18

      Item 4T. Controls and Procedures...................................................................    18

PART II - OTHER INFORMATION

     Item 6. Exhibits.....................................................................................   20

     Signatures ..........................................................................................   21


CERTIFICATIONS                                                                                            Exhibits
</TABLE>
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                   AS OF MARCH 31, 2009 AND DECEMBER 31, 2008
                        (In thousands, except share data)
<TABLE>
<CAPTION>
                                                                                    March 31,           December 31,
                                                                                      2009                 2008
                                                                              --------------------- --------------------
                                                                                   (Unaudited)
ASSETS
Current assets
<S>                                                                           <C>                   <C>
  Cash and cash equivalents                                                   $           1,173     $             980
  Accounts receivable, net of allowance for doubtful accounts of
   $0 in 2009 and 2008                                                                    1,943                 1,951
  Prepaid expenses and other current assets                                                 213                   162
                                                                              --------------------- --------------------
       Total current assets                                                               3,329                 3,093

Property and equipment, net                                                                 558                   649
Deferred tax asset                                                                        2,867                 2,867
Other assets                                                                                271                   271
                                                                              --------------------- --------------------
         TOTAL ASSETS                                                          $          7,025     $           6,880
                                                                               ==================== ====================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable and accrued expenses                                        $          1,442     $           1,802
  Current portion of capital lease obligations                                                5                     6
  Current portion of notes payable                                                          175                   172
  Warrant liability                                                                         125                    --
  Dividends payable                                                                          79                   124
  Deferred revenue                                                                           75                    75
                                                                              ------------------    -------------------
       Total current liabilities                                                          1,901                 2,179

Capital lease obligations, net of current portion                                             5                     7
Notes payable, net of current portion                                                       230                   274
                                                                              -------------------   -------------------
       Total liabilities                                                                  2,136                 2,460
                                                                              ------------------    -------------------

Commitments and contingencies

Shareholders' equity
  Preferred stock, $0.0001 par value; 2,000,000 shares authorized;
    Series B Redeemable Preferred, 974 shares issued and outstanding in
    2009 and 2008; liquidation preference of $974,075;
    Series C Redeemable Preferred, 2,000 shares issued and outstanding                        -                     -
    in 2009 and 2008; liquidation preference of $2,000,000;
    Series D Redeemable Preferred, 100 shares issued and outstanding                          -                     -
    in 2009 and 2008; liquidation preference of $100,000.
  Common stock, $0.0001 par value; 50,000,000 shares authorized;
  10,726,666 and 10,311,968 shares issued in 2009 and 2008,
  respectively; and 10,686,739 and 10,272,041 shares outstanding in 2009                      1                     1
  and 2008, respectively
  Additional paid-in capital                                                            117,167               116,862
  Accumulated deficit                                                                  (111,951)             (112,115)
                                                                              ------------------    -------------------
                                                                                          5,217                 4,748
  Common stock in treasury, at cost  - 24,371 shares                                       (328)                 (328)
                                                                              ------------------    -------------------
       Total shareholders' equity                                                         4,889                 4,420
                                                                              -----------------     ------------------

          TOTAL LIABILITIES AND SHAREHODERS' EQUITY                           $           7,025     $            6,880
                                                                              ====================  ==================

</TABLE>

See notes to condensed consolidated financial statements.                      3
<PAGE>


                      DIRECT INSITE CORP. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2009 and 2008
                      (in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                                           Three Months Ended
                                                                                           ------------------
                                                                                                March 31,
                                                                                                ---------
                                                                                         2009             2008
                                                                                    ---------------- ----------------
   <S>                                                                              <C>              <C>
   Revenue                                                                          $       2,294    $       1,954
                                                                                    ---------------- ----------------
   Costs and expenses
     Operations, research and development                                                     866              825
     Sales and marketing                                                                      343              210
     General and administrative                                                               740              786
     Amortization and depreciation                                                             97               76
                                                                                    ---------------- ----------------

                                                                                            2,046            1,897
                                                                                    ---------------- ----------------
   Operating income                                                                           248               57

   Other (income) expense
     Change in fair value of warrant liability                                                (21)              --
     Interest expense, net                                                                      6               12
                                                                                    ---------------- ----------------
   Income  before  income taxes                                                               263               45

   Provision for (benefit from) income tax                                                     15           (2,867)
                                                                                    ---------------- ----------------
   Net income                                                                                 248            2,912

   Preferred stock dividends                                                                  (79)            (173)
                                                                                    ---------------- ----------------

   Net  income  attributable to common shareholders                                 $         169    $       2,739
                                                                                    ================ ================

   Basic  income per share attributable to common shareholders                      $        0.02    $        0.38
                                                                                    ================ ================

   Diluted  income per share attributable to common shareholders                    $        0.02    $        0.26
                                                                                    ================ ================
   Basic weighted average common shares outstanding
                                                                                           10,670            7,199
                                                                                    ================ ================
   Diluted weighted average common shares outstanding
                                                                                           11,093           10,927
                                                                                    ================ ================
</TABLE>
See notes to condensed consolidated financial statements.                      4
<PAGE>
                               DIRECT INSITE CORP
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

               FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
                        (In thousands, except share data)
<TABLE>
<CAPTION>

                                                                                          For the three months ended
                                                                                                  March 31,
                                                                                           2009              2008
                                                                                     ----------------- ------------------
Cash flows from operating activities
<S>                                                                                     <C>              <C>
 Net income                                                                             $        248     $        2,912

 Adjustments to reconcile net income
  to net cash provided by operations:
    Amortization and depreciation                                                                 97                76
    Deferred taxes                                                                                --            (2,867)
    Stock based compensation expense                                                             149               180
    Change in fair value of warrant liability                                                    (21)               --

  Changes in operating assets and liabilities:
    Accounts receivable                                                                            8              (111)
    Prepaid expenses and other current assets                                                    (50)               (6)
    Accounts payable and accrued expenses                                                       (164)              (91)
    Deferred revenue                                                                              --                94
                                                                                     ----------------- ------------------
       Net cash provided by operations                                                           267               187
                                                                                     ----------------- ------------------

Cash flows used in investing activities:
    Expenditures for property and equipment                                                       (7)              (89)
                                                                                     ----------------- ------------------

Cash flows from financing activities:
    Payment of dividends on preferred stock                                                     (124)             (773)
    Proceeds from issuance of shares on exercise of warrants                                     100                --
    Principal payments on capital lease obligations                                               (2)              (11)
    Repayments of long-term debt                                                                 (41)              (22)
                                                                                     ----------------- ------------------
       Net cash used in financing activities                                                     (67)             (806)
                                                                                     ----------------- ------------------

Net increase (decrease)  in cash and cash equivalents                                            193              (708)

Cash and cash equivalents - beginning of period                                                  980             2,184
                                                                                     ----------------- ------------------
Cash and cash equivalents - end of period                                            $         1,173     $       1,476
                                                                                     ===============     ================
Supplemental Disclosures:

Cash paid for interest                                                               $            8      $          19
                                                                                     ===============     ================
Cash paid for income taxes                                                           $           --      $          30
                                                                                     ===============     ================

Non-cash investing and financing activities:
  Reduction in accrued liabilities through issuance of debt                          $            --     $          62
                                                                                     ===============     ================
  Dividends accrued and unpaid                                                       $            79     $         173
                                                                                     ===============     ================
  Reduction in accrued liabilities through issuance of common stock                  $           197     $          --
                                                                                     ===============     ================
  Derivative liability on adoption of EITF 07-5                                      $           146     $          --
                                                                                     ===============     ================
</TABLE>
See notes to condensed consolidated financial statements.                      5
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1.   Interim Financial Information

     The  accompanying   unaudited  condensed   consolidated  interim  financial
     statements include the accounts of Direct Insite Corp. and its subsidiaries
     ("Direct  Insite"  or  the  "Company").   All  intercompany   balances  and
     transactions   have  been  eliminated  in   consolidation.   The  condensed
     consolidated  balance  sheet  as of  March  31,  2009,  and  the  condensed
     consolidated statements of income and cash flows for the three months ended
     March 31,  2009 and 2008,  have been  prepared  by the  Company and are not
     audited.   These  unaudited,   condensed   consolidated  interim  financial
     statements  have been prepared in  accordance  with  accounting  principles
     generally  accepted in the United  States of America for interim  financial
     information and with the  instructions to Form 10-Q.  Accordingly,  they do
     not include all of the  information  and  footnotes  required by accounting
     principles  generally accepted in the United States of America ("GAAP") for
     complete financial statements.  In addition,  the December 31, 2008 balance
     sheet data was derived from the audited consolidated  financial statements,
     but does not  include  all  disclosures  required  by GAAP.  These  interim
     condensed  consolidated  financial statements include all adjustments which
     management  considers  necessary for a fair  presentation  of the financial
     statements and consist of normal recurring items. The results of operations
     for the three months ended March 31, 2009, are not  necessarily  indicative
     of results  that may be expected  for any other  interim  period or for the
     full year.

     These unaudited condensed  consolidated financial statements should be read
     in conjunction with the audited consolidated financial statements and notes
     thereto  for the year ended  December  31, 2008  included in the  Company's
     Form-10K.  The  accounting  policies  used  in  preparing  these  unaudited
     condensed  consolidated  financial  statements  are  consistent  with those
     described  in  the  audited  December  31,  2008   consolidated   financial
     statements.

     Use of Estimates
     ----------------

     In preparing financial statements in conformity with accounting  principles
     generally  accepted  in the  United  States of  America,  management  makes
     estimates and  assumptions  that affect the reported  amounts of assets and
     liabilities  and  disclosures of contingent  assets and  liabilities at the
     date of the condensed  consolidated  financial  statements,  as well as the
     reported  amounts of revenue  and  expenses  during the  reporting  period.
     Management  bases its  estimates on  historical  experience  and on various
     assumptions that are believed to be reasonable under the circumstances, the
     results  of which form the basis for making  judgments  about the  carrying
     values of assets and liabilities  that are not readily  apparent from other
     sources.  Disclosures that are particularly sensitive to estimation include
     revenue  recognition,  stock based compensation,  fair value of the warrant
     liability,  and the  valuation  allowance  on deferred  tax assets.  Actual
     results could differ from those estimates.

2.   The Company

     Direct Insite Corp.  was organized as a public  company,  under the laws of
     the State of  Delaware  on August 27,  1987.  Direct  Insite  operates as a
     Software as a Service provider ("SaaS"),  providing best practice financial
     supply chain automation and workflow efficiencies within the Procure-to-Pay
     (PTP) and  Order-to-Cash  (OTC) processes.  The Company's global Electronic
     Invoice Presentment and Payment ("EIP&P") services automate manual business
     processes such as complex  billing,  invoice  validation,  invoice-to-order
     matching, consolidation, dispute handling, and payment processing.

     As described in Note 9, the Company has three  customers that accounted for
     approximately 97.4% and 98.4% of the Company's revenue for the three months
     ended March 31, 2009 and 2008, respectively.  Loss of IBM or EDS would have
     a material adverse effect on the Company.

                                       6
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

3.   Change in Accounting Principle

     Effective January 1, 2009, the Company,  following the guidance of Emerging
     Issues Task Force 07-5:  "Determining  Whether an  Instrument  (or Embedded
     Feature)  Is  Indexed to an  Entity's  Own  Stock"  ("EITF  07-5") and that
     pronouncements  effect in  interpreting  Statement of Financial  Accounting
     Standards ("SFAS") Statement No. 133 "Accounting for Derivative Instruments
     and Hedging  Activities" ("SFAS 133"),  determined that a warrant issued in
     conjunction  with the guarantee of a credit facility  contained a provision
     whereby  the  exercise  price  could be  adjusted  upon  certain  financing
     transactions  at a lower  price  per  share  could no  longer  be viewed as
     indexed to the Company's  common stock.  As such,  the Company  changed the
     accounting for this warrant to a  "derivative"  under SFAS 133. As a result
     the Company recorded the warrant liability at the fair value of the warrant
     of $146,000 as of January 1, 2009 and  reclassified  its issuance date fair
     value from additional paid-in-capital. The cumulative effect on adoption of
     EITF 07-5 as of January 1, 2009 is as follows:
<TABLE>
<CAPTION>
      ---------------------------------------------------------- ----------------------------- ----------------------
                                                                 Additional Paid In Capital    Accumulated Deficit
      ---------------------------------------------------------- ----------------------------- ----------------------
                                                                                    ($ in thousands)
      ---------------------------------------------------------- ----------------------------- ----------------------
      <S>                                                               <C>                         <C>
      Balance December 31, 2008                                         $116,862                    ($112,115)
      ---------------------------------------------------------- ----------------------------- ----------------------
        Cumulative effect of change in accounting principle                 (141)                          (5)
                                                                 ----------------------------- ----------------------
      ---------------------------------------------------------- ----------------------------- ----------------------
      Balance January 1, 2009                                           $116,721                    ($112,120)
                                                                 ========================      ===================
      ---------------------------------------------------------- ----------------------------- ----------------------
</TABLE>
4.   Stock Based Compensation

     Stock Options
     -------------
     The Company  accounts for stock  options  using the fair value  recognition
     provisions of "SFAS No, 123 (Revised 2004),  "Share-Based Payment",  ("SFAS
     123(R)").  As a result, for the three months ended March 31, 2009 and 2008,
     the Company  recorded  $9,000 and $45,000,  respectively,  in  compensation
     expense  for the fair value of  options.  At March 31,  2009,  there was no
     unrecognized compensation costs related to stock options granted.

     Nonqualified  and  incentive  stock options have been granted to directors,
     officers and employees of the Company under our Stock Option Plans. Options
     generally  vest over 3 years and  expire  five  years  from the date of the
     grant.  At March 31, 2009,  3,454,468  shares were  authorized for issuance
     under the stock option plans.  Awards that expire or are cancelled  without
     delivery of shares generally become available for issuance under the plans.
     The Company issues new shares to satisfy stock option exercises. There were
     no options granted during the three months ended March 31, 2009. During the
     three months ended March 31, 2008 the Company  issued 75,000 options with a
     weighted  average  grant date fair value of $69,000.  The fair value of the
     stock  options  granted  was  estimated  on the date of the grant using the
     Black-Scholes option pricing model (see Note 8).

     A summary of option  activity  under the plans for the three  months  ended
     March 31, 2009 is as follows:
<TABLE>
<CAPTION>
   ------------------------------------ ----------------- --------------------- -------------------- ----------------------
                                                                                   Weighted Average
                                                              Weighted Average  Remaining Contractual Aggregate Intrinsic Value
                                               Shares          Exercise Price       Term (in years)       (in thousands)
                                           (in thousands)
   ------------------------------------ ----------------- --------------------- -------------------- ----------------------
   <S>                                         <C>                 <C>                    <C>                  <C>
   Balance,January 1, 2009                     1,277               $0.62
   ------------------------------------ ----------------- --------------------- -------------------- ----------------------
       Granted                                    --                 --
   ------------------------------------ ----------------- --------------------- -------------------- ----------------------
       Exercised                                  --                 --
   ------------------------------------ ----------------- --------------------- -------------------- ----------------------
       Canceled                                   --                 --
   ------------------------------------ ----------------- --------------------- -------------------- ----------------------
       Forfeited                                  --                 --
   ------------------------------------ ----------------- --------------------- -------------------- ----------------------
   Balance, March 31, 2009                     1,277              $0.62                   2.4                  $545
   ------------------------------------ ----------------- --------------------- -------------------- ----------------------
   Exercisable, March 31, 2009                 1,277              $0.62                   2.4                  $545
   ------------------------------------ ----------------- --------------------- -------------------- ----------------------
</TABLE>
     The total fair value of options  vested during the three months ended March
     31, 2009 and 2008 was $35,000 and $45,000, respectively.
                                       7
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

4.   Stock Based Compensation (continued)

     Restricted Stock Grants
     -----------------------

     During the three  months  ended March 31, 2009 the Company  granted  44,544
     shares to directors as part of their  compensation.  The stock grants had a
     fair value of $49,000  based on the closing  price of the stock on the date
     of the grant.  The stock  grants vest over the two year  period  January 1,
     2009 through December 31, 2010.

     A summary  of the  status of the  Company's  restricted  non-vested  shares
     issued  pursuant to employment and service  agreements as of March 31, 2009
     and changes  during the three  months  ended  March 31,  2009 is  presented
     below:
<TABLE>
<CAPTION>
------------------------------------------ ---------------------------------- ------------------------------------------------

              Non-vested Shares                    Shares (in thousands)           Weighted-average Grant Date Fair Value
------------------------------------------ ---------------------------------- ------------------------------------------------
<S>                                                       <C>                                        <C>
Non-vested at January 1, 2009                             521                                        $2.21
------------------------------------------ ---------------------------------- ------------------------------------------------
Granted                                                    45                                        $1.09
------------------------------------------ ---------------------------------- ------------------------------------------------
Vested                                                    (76)                                       $2.10
------------------------------------------ ---------------------------------- ------------------------------------------------
Forfeited                                                  --                                           --
                                           -------------------------------------
------------------------------------------ ---------------------------------- ------------------------------------------------
Non-vested at March 31, 2009                              490                                        $2.13
                                           =====================================
------------------------------------------ ---------------------------------- ------------------------------------------------
</TABLE>
     For the three  months  ended  March 31,  2009 and 2008  stock  compensation
     expense for stock grants was $140,000 and $134,000,  respectively. At March
     31, 2009, the future expected expense for non-vested shares is $911,000 and
     will be recognized on a  straight-line  basis over the period April 1, 2009
     through December 31, 2010.

5.   Fair Value of Financial  Instruments

     SFAS No. 157, "Fair Value Measurements"  ("SFAS 157"),  defines fair value,
     establishes  a  framework  for  measuring  fair  value in  accordance  with
     generally accepted accounting principles, and expands disclosures about the
     price  that  would be  received  to sell an asset,  or paid to  transfer  a
     liability in an orderly  transaction  between  market  participants  at the
     measurement  date. SFAS 157 applies to all assets and liabilities  that are
     measured and reported on a fair value basis.

     SFAS 157 establishes a three-tier  fair value  hierarchy which  prioritizes
     the inputs used in measuring fair value as follows:

        Level 1 - Observable inputs such as quoted prices in active markets;

        Level 2 - Inputs, other  than  the quoted prices in active markets, that
                  are observable either directly or indirectly;

        Level 3 - Unobservable inputs  in  which  there  is  little or no market
                  data, which require the reporting  entity to develop  its  own
                  assumptions.

     The following are the Company's major categories of liabilities measured at
     fair value on a recurring basis at March 31, 2009,  categorized by the SFAS
     157 fair value hierarchy:

                                       8
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

5.   Fair Value of Financial Instruments and Warrant Liability (continued)

     Fair Value  Measurements at March 31, 2009 Using  Significant  Unobservable
     ---------------------------------------------------------------------------
     Inputs:
     ------
<TABLE>
<CAPTION>
              Description                                   (Level 3)
      ----------------------------------------------    -----------------
              Liabilities:
                  <S>                                       <C>
                  Warrant liability                         $  125
                                                        =================
</TABLE>
     The following is a reconciliation  of the beginning and ending balances for
     the Company's liabilities measured at fair value on a recurring basis using
     significant  unobservable  inputs (Level 3) and a summary of the derivative
     warrant liability during the year ended March 31, 2009:
<TABLE>
<CAPTION>
       Fair Value Measurements Using Significant Unobservable Inputs (Level 3):
       -------------------------------------------------------------------------
                           Description                                       (Level 3)
   -----------------------------------------------------------------     -----------------
          Liabilities:
          <S>                                                                 <C>
             Balance at January 1, 2009                                       $      --

             Cumulative effect of the change in accounting
          principal, January 1, 2009                                                146

             Change in fair value included in operations                             21
                                                                         -----------------

              Balance, March 31, 2009                                         $     125
                                                                         =================
</TABLE>
     The change in fair value  recorded for Level 3 liabilities  for the periods
     above are reported in other income (expense) on the consolidated  statement
     of operations.

6.   Warrant Liability
     -----------------
     The Company  accounts for certain  warrants as a derivative  liability (see
     Note 3.) using the fair value method at the end of each  quarter,  with the
     resultant gain or loss recognition  recorded against earnings.  The Company
     recognized a total  non-cash  gain of  approximately  $21,000 for the three
     months ended March 31, 2009 for these derivative  warrants.  The fair value
     of  the  derivative  warrants  was  determined  using  the  Black  -Scholes
     valuation  model using the closing price stock price of $0.99, a volatility
     rate of 57%, a risk free interest  rate of 0.81% and a contractual  life of
     1.3 years.

7.   Debt

     Notes payable
     -------------
     At March 31, 2009 and December 31, 2008,  notes payable consist of $405,000
     and $446,000,  respectively,  of borrowings  for the purchase of equipment.
     These notes bear  interest at rates ranging from 8.8% to 10.3% per year and
     mature through January 2012. The notes are  collateralized by the equipment
     purchased with net book values of $332,000 and $396,000,  at March 31, 2009
     and December 31, 2008, respectively.

     Capitalized lease obligations
     -----------------------------

     The Company has  equipment  under  capital  lease  obligations  expiring at
     various times through 2011. The assets and liabilities under capital leases
     are  recorded  at the  lower of the  present  values of the  minimum  lease
     payments or the fair values of the assets. The interest rates pertaining to
     these  capital  leases range from 12.3% to 15.3%.  At March 31,  2009,  the
     gross and net book value of the related assets is approximately $38,000 and
     $12,000,  respectively.  At December 31, 2008, the gross and net book value
     of the related assets was approximately $38,000 and $18,000, respectively.

                                       9
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

8.     Shareholders' Equity

     The following table summarizes the changes in shareholders'  equity for the
     three months ended March 31, 2009:
<TABLE>
<CAPTION>
                -------------------------------------------------- --------------------
                                                                         In thousands
                -------------------------------------------------- --------------------
                       <S>                                                <C>
                       Balance, December 31, 2008                         $   4,420
                -------------------------------------------------- --------------------
                       Cumulative  effect of change in accounting
                       principle                                               (146)
                -------------------------------------------------- --------------------
                       Balance - January 1, 2009                          $   4,274
                -------------------------------------------------- --------------------
                          Dividends accrued                                     (79)
                -------------------------------------------------- --------------------
                          Stock based compensation                              149
                -------------------------------------------------- --------------------
                            Shares issued for settlement of
                            accrued liabilities                                 197
                -------------------------------------------------- --------------------
                            Proceeds on exercise of warrants                    100
                -------------------------------------------------- --------------------
                          Net income                                            248
                                                                          -----------
                -------------------------------------------------- --------------------
                       Balance - March 31, 2009                           $   4,889
                -------------------------------------------------- --------------------
</TABLE>
     Common Stock and Option Issuances
     ---------------------------------

     During the three  months  ended March 31, 2009 the  Company  issued  67,500
     restricted common shares with a fair value of $130,000 based on the closing
     share price on the date of the grant to certain  officers under  employment
     agreements. The Company also issued 319,050 restricted common shares valued
     at $197,000 to directors in  settlement  of directors  fees accrued in 2006
     and 2007. The Company also issued 95,648 shares on exercise of warrants and
     received proceeds of $100,000.

     During the three  months ended March 31, 2008,  the Company  issued  75,000
     options to an officer and a director to purchase common stock.  The options
     have an exercise  prices of $1.50 (the  trading  price of the shares at the
     date of the  grant)  and a fair  value at the grant  date of  $69,000.  The
     valuation  was  determined  using  the   Black-Scholes   method.   The  key
     assumptions  used were a volatility  of 98.1%,  dividend rate of 0%, a risk
     free rate of 1.9% and an expected life (using the simplified method) of 3.0
     years.

     Earnings Per Share
     ------------------

     The Company  displays  earnings per share in accordance  with SFAS No. 128,
     "Earnings Per Share".  SFAS No. 128 requires dual presentation of basic and
     diluted  earnings per share ("EPS").  Basic EPS includes no dilution and is
     computed by dividing net income (loss)  attributable to common shareholders
     by the weighted average number of common shares outstanding for the period.
     Diluted EPS includes the potential  dilution that could occur if securities
     or other  contracts to issue common stock were  exercised or converted into
     common stock. Outstanding stock options, warrants and other potential stock
     issuances  are not included in the  computation  when their effect would be
     anti-dilutive.  The  following  table  presents  the  shares  used  in  the
     computation of diluted  earnings per share for the three months ended March
     31, 2009 and 2008:

                                       10
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

8. Shareholders' Equity (continued)
<TABLE>
<CAPTION>

---------------------------------------------------- -------------------- --------------------
                                                     Three Months Ended   Three Months Ended
                                                       March 31, 2009       March 31, 2008
---------------------------------------------------- -------------------- --------------------
                                                       (in thousands)       (in thousands)
---------------------------------------------------- -------------------- --------------------
<S>                                                          <C>                  <C>
       Weighted Average Common shares outstanding            10,670                7,199
---------------------------------------------------- -------------------- --------------------
       Warrants to purchase common stock                         --                  989
---------------------------------------------------- -------------------- --------------------
       Options to purchase common stock                         396                1,387
---------------------------------------------------- -------------------- --------------------
       Restricted stock grants                                   27                    5
---------------------------------------------------- -------------------- --------------------
       Series A Convertible preferred stock                      --                1,347
                                                            --------             --------

---------------------------------------------------- -------------------- --------------------
       Total diluted shares                                  11,093               10,927
                                                            ========             ========
---------------------------------------------------- -------------------- --------------------
</TABLE>
     Securities that could potentially dilute basic EPS in the future, that were
     not included in the  computation  of the diluted EPS because to do so would
     have been anti-dilutive for the periods presented, consist of the following
     (in thousands):
<TABLE>
<CAPTION>
----------------------------------------------------- --------------------- --------------------
                                                       Three Months Ended   Three Months Ended
                                                         March 31, 2009        March 31, 2008
----------------------------------------------------- --------------------- --------------------
                                                         (in thousands)       (in thousands)
----------------------------------------------------- --------------------- --------------------
       <S>                                                      <C>                   <C>
       Options to purchase common stock                           123                    75
----------------------------------------------------- --------------------- --------------------
       Warrants to purchase common stock                          943                   552
----------------------------------------------------- --------------------- --------------------
       Restricted stock grants                                    487                   673
                                                                  ---                   ---
----------------------------------------------------- --------------------- --------------------

----------------------------------------------------- --------------------- --------------------
             Total potential common shares                      1,553                 1,300
                                                                =====                 =====
----------------------------------------------------- --------------------- --------------------
</TABLE>
9.   Products and Services

     The Company and its subsidiaries  currently operate in one business segment
     and provide two separate  products:  SaaS  services and custom  engineering
     services. The following table displays revenue by product (in thousands):
<TABLE>
<CAPTION>
                                                 Three Months Ended March 31,

                                                      2009             2008
                                                     ------           ------
<S>                                                  <C>              <C>
                    SaaS fees                        $2,233           $1,829
                    Custom engineering fees              61              125
                                                     ------           ------

                         Total Revenue               $2,294           $1,954
                                                     ======           ======
</TABLE>
     Major Customers
     ---------------

     For the three months ended March 31, 2009 and 2008, IBM accounted for 36.2%
     and 47.6% of revenue,  respectively.  For the three  months ended March 31,
     2009 and 2008,  EDS an HP company  (formerly  EDS)  accounted for 48.6% and
     50.0% of revenue,  respectively.  For the three months ended March 31, 2009
     and 2008 Siemens Shared  Services LLC  ("Siemens")  accounted for 12.6% and
     less than 1% of  revenue,  respectively.  Accounts  receivable  from  these
     customers  amounted  to  $1,893,000  and  $1,879,000  at March 31, 2009 and
     December 31, 2008, respectively.

                                       11
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

10.   Income Taxes

     In its interim  financial  statements  the Company  follows the guidance in
     Accounting   Principles   Board  ("APB")  Opinion  28  "Interim   Financial
     Reporting"  and FIN 18 "Accounting  for Income Taxes in Interim  Periods an
     Interpretation of APB 28", whereby the Company utilizes the expected annual
     effective tax rate in determining its income tax provisions for the interim
     period's  income or loss. As the Company has significant net operating loss
     carry-forwards  the  effective  income tax rate applied to the period ended
     March 31, 2009 income was 5%. The Company  accounts  for income taxes using
     the liability  method.  The liability method requires the  determination of
     deferred tax assets and liabilities  based on the  differences  between the
     financial  statement and income tax basis of assets and liabilities,  using
     enacted tax rates. Additionally,  net deferred tax assets are adjusted by a
     valuation  allowance if, based on the weight of available  evidence,  it is
     more  likely  than not that some  portion  or all of the net  deferred  tax
     assets will not be realized. The Company currently has significant deferred
     tax assets consisting  predominately of net operating loss  carry-forwards.
     SFAS No.  109,  "Accounting  for  Income  Taxes  ("FAS  109"),  requires  a
     valuation allowance be established when it is more likely than not that all
     or a portion of deferred tax assets will not be realized.  During the three
     months ended March 31, 2008,  the Company  reviewed  previous  positive and
     negative  evidence and also reviewed its expected taxable income for future
     periods and  concluded  that it is more likely than not that  approximately
     $2,867,000  of tax benefits  related to net operating  loss  carry-forwards
     will be utilized in future tax years and, therefore,  reduced its valuation
     allowance  during the three months ended March 31, 2008 in accordance  with
     APB 28. As a result the  Company's  effective tax rate for the three months
     ended March 31, 2008 differs from the current statutory rates. In addition,
     the  Company  expects to provide a  valuation  allowance  on the  remaining
     future tax  benefits  until it can  sustain a level of  profitability  that
     demonstrates  its  ability  to  utilize  the  remaining  assets,  or  other
     significant  positive  evidence arises that suggests its ability to utilize
     the remaining assets.  The future  realization of a portion of its reserved
     deferred tax assets related to tax benefits associated with the exercise of
     stock options,  if and when  realized,  will not result in a tax benefit in
     the  consolidated  statement  of  operations,  but rather will result in an
     increase in  additional  paid in  capital.  The  Company  will  continue to
     re-assess its reserves on deferred income tax assets in future periods on a
     quarterly  basis.  The Company has elected the "with and without  approach"
     regarding  ordering  of windfall  tax  benefits  to  determine  whether the
     windfall tax benefit did reduce taxes  payable in the current  year.  Under
     this  approach the windfall tax benefit  would be  recognized in additional
     paid-in-capital  only if an  incremental  tax  benefit  is  realized  after
     considering all other benefits presently available.

     At December 31, 2008,  the Company had federal and state net operating loss
     carryforwards  ("NOLs")  remaining  of  approximately  $72  million and $26
     million, respectively,  which may be available to reduce taxable income, if
     any. These NOLs expire through 2025.

11.  New Accounting Pronouncements

     In  December  2007,  the FASB  issued  Statement  of  Financial  Accounting
     Standards ("SFAS") No. 141R,  "Business  Combinations" ("SFAS 141R"), which
     replaces  SFAS No.  141,  "Business  Combinations."  SFAS 141R  establishes
     principles and  requirements  for determining how an enterprise  recognizes
     and measures the fair value of certain assets and liabilities acquired in a
     business  combination,   including  non-controlling  interests,  contingent
     consideration, and certain acquired contingencies.  SFAS 141R also requires
     acquisition-related   transaction   expenses  and  restructuring  costs  be
     expensed as incurred rather than capitalized as a component of the business
     combination.  SFAS  141R  will  be  applicable  prospectively  to  business
     combinations for which the acquisition date is on or after the beginning of
     the first annual  reporting period beginning on or after December 15, 2008.
     SFAS 141R would have an impact on accounting  for any  businesses  acquired
     after the effective date of this pronouncement.

     In December 2007, the FASB issued SFAS No. 160, "Non-controlling  Interests
     in Consolidated  Financial  Statements - An Amendment of ARB No. 51" ("SFAS
     160").  SFAS 160  establishes  accounting  and reporting  standards for the
     non-controlling  interest  in  a  subsidiary  (previously  referred  to  as
     minority interests). SFAS 160 also requires that a retained non-controlling


                                       12
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

11.  New Accounting Pronouncements (continued)

     interest upon the  deconsolidation of a subsidiary be initially measured at
     its fair value. Upon adoption of SFAS 160, the Company would be required to
     report  any   non-controlling   interests   as  a  separate   component  of
     stockholders' equity. The Company would also be required to present any net
     income allocable to non-controlling  interests and net income  attributable
     to  the  stockholders  of  the  Company   separately  in  its  consolidated
     statements  of  operations.  SFAS 160 is effective  for fiscal  years,  and
     interim  periods within those fiscal years,  beginning on or after December
     15, 2008. SFAS 160 requires  retroactive  adoption of the  presentation and
     disclosure   requirements  for  existing  minority  interests.   All  other
     requirements  of SFAS 160 shall be  applied  prospectively.  SFAS 160 would
     have an impact on the  presentation  and disclosure of the  non-controlling
     interests of any non wholly-owned businesses acquired in the future.

     In March  2008,  the FASB issued SFAS 161,  "Disclosures  about  Derivative
     Instruments and Hedging Activities an amendment of FASB Statement No. 133",
     which amends and expands the disclosure requirements of SFAS 133 to require
     qualitative   disclosure   about   objectives   and  strategies  for  using
     derivatives, quantitative disclosures about fair value amounts of and gains
     and   losses   on   derivative    instruments,    and   disclosures   about
     credit-risk-related  contingent  features in  derivative  agreements.  This
     statement is effective  for the Company  beginning on January 1, 2009.  The
     adoption of this statement  changed the  disclosures  related to derivative
     instruments (warrant liability) held by the Company.

     In June 2008,  the FASB  ratified  EITF No. 07-5,  "Determining  Whether an
     Instrument  (or an Embedded  Feature) is Indexed to an Entity's  Own Stock"
     ("EITF  07-5").  EITF 07-5  provides  that an entity  should use a two-step
     approach to evaluate  whether an  equity-linked  financial  instrument  (or
     embedded  feature) is indexed to its own stock,  including  evaluating  the
     instrument's  contingent exercise and settlement  provisions.  EITF 07-5 is
     effective for financial  statements issued for fiscal years beginning after
     December 15, 2008. Early application is not permitted.  See Note 3. for the
     impact of EITF 07-5 on the consolidated  financial condition and results of
     operations.

                                       13
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

Item 2 - Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Forward looking statements

All statements  other than  statements of historical  fact included in this Form
10-Q including,  without limitation,  statements under, "Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations"  regarding the
Company's financial position,  business strategy and the plans and objectives of
management for future operations, are forward-looking  statements.  When used in
this Form 10-Q, words such as  "anticipate,"  "believe,"  "estimate,"  "expect,"
"intend"  and  similar  expressions,  as  they  relate  to  the  Company  or its
management, identify forward-looking statements. Such forward-looking statements
are based on the  beliefs of  management,  as well as  assumptions  made by, and
information  currently  available to, the Company's  management.  Actual results
could  differ  materially  from  those   contemplated  by  the   forward-looking
statements  as a  result  of  certain  factors  including  but not  limited  to,
fluctuations in future operating results, technological changes or difficulties,
management  of future  growth,  the risk of errors or failures in the  Company's
software products,  dependence on proprietary  technology,  competitive factors,
risks associated with potential acquisitions,  the ability to recruit personnel,
the  dependence  on key  personnel,  and such other risk factors which may arise
from time to time  including,  but not limited to, the risk factors as set forth
in the  Company's  Reports  on Form 10K as filed  with the  Securities  Exchange
Commission. Such statements reflect the current views of management with respect
to future  events and are subject to these and other  risks,  uncertainties  and
assumptions relating to the operations,  results of operations,  growth strategy
and liquidity of the Company.  All subsequent  written and oral  forward-looking
statements  attributable  to the  Company  or  persons  acting on its behalf are
expressly qualified in their entirety by this paragraph.

Overview

Direct Insite Corp. and its  subsidiaries  (hereinafter  referred to at times as
"Direct Insite" or the "Company"),  was organized as a public company, under the
laws of the State of Delaware on August 27, 1987.  Direct  Insite  operates as a
Software as a Service  provider  ("SaaS"),  providing  best  practice  financial
supply chain  automation  and workflow  efficiencies  within the  Procure-to-Pay
(PTP) and Order-to-Cash (OTC) processes. The Company's global Electronic Invoice
Presentment and Payment ("EIP&P")  services  automate manual business  processes
such  as  complex  billing,  invoice  validation,   invoice-to-order   matching,
consolidation, dispute handling, and payment processing.

Direct  Insite is currently  delivering  service and  business  value across the
Americas,  Europe, and Asia,  including 62 countries,  15 languages and multiple
currencies. Direct Insite processes, hosts and distributes millions of invoices,
purchase orders, and attachment  documents making them accessible on-line within
an internet self service portal. Suppliers,  customers, and internal departments
such as Finance  and  Accounting  or  Customer  Service  users can access  their
business documents 24 hours per day, seven days per week, 365 days per year.

For the three months ended March 31, 2009 and 2008,  IBM accounted for 36.2% and
47.6% of revenue,  respectively.  The decrease in revenue from IBM is due to the
decrease in services to IBM in Europe resulting from the  discontinuance  of one
service IBM no longer required and a decrease in engineering  services resulting
from the completion of deploying the IOL service to all major  geographies.  For
the three  months  ended  March 31,  2009 and 2008,  EDS an HP  company  ("EDS")
accounted for 48.6% and 50.0% of revenue, respectively.  Electronic Data Systems
Corp.  was  acquired  by the  Hewlett-Packard  Company in 2008.  Siemens  Shared
Services LLC accounted for 12.6% of revenue for the three months ended March 31,
2009 and less than 1% of revenue for the same period in 2008.

Critical accounting policies

Our condensed  consolidated  financial  statements and the notes thereto contain
information  that is pertinent to  management's  discussion  and  analysis.  The
preparation of financial  statements in conformity  with  accounting  principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosures of contingent assets and liabilities. Management bases its estimates
on historical  experience and on various other  assumptions that are believed to

                                       14
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

be reasonable under the  circumstances,  the results of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily  apparent  from other  sources.  On a continuing  basis,  management
reviews its estimates  utilizing  currently  available  information,  changes in
facts and circumstances, historical experience and reasonable assumptions. After
such  reviews,   and  if  deemed  appropriate,   those  estimates  are  adjusted
accordingly.  Actual results may vary from these estimates and assumptions under
different  and/or  future  circumstances.  Management  considers  an  accounting
estimate to be critical if:

     o    it requires assumptions to be made that were uncertain at the time the
          estimate was made; and

     o    changes in the estimate,  or the use of different  estimating  methods
          that could  have been  selected,  could have a material  impact on the
          Company's  condensed  consolidated  results of operations or financial
          condition.

The following critical  accounting policies have been identified that affect the
more  significant  judgments  and  estimates  used  in  the  preparation  of the
consolidated financial statements. We believe that the following are some of the
more critical judgment areas in the application of our accounting  policies that
affect our financial condition and results of operations.  We have discussed the
application of these critical accounting policies with our Audit Committee.  The
following  critical  accounting  policies are not intended to be a comprehensive
list of all of the Company's accounting policies or estimates.

Revenue Recognition
-------------------

We record revenue in accordance  with Statement of Position 81-1,  issued by the
American  Institute of Certified  Public  Accountants  and SEC Staff  Accounting
Bulletin  Topic  13  "Revenue  Recognition  in  Financial  Statements."  In some
circumstances,  we enter into  arrangements  whereby the Company is obligated to
deliver  to  its  customer   multiple   products   and/or   services   (multiple
deliverables).  In these  transactions,  in accordance  with the Emerging Issues
Task  Force  ("EITF")  Issue No.  00-21,  "Revenue  Arrangements  with  Multiple
Deliverables",  the Company  allocates  the total revenue to be earned among the
various  elements  based on their relative fair values.  The Company  recognizes
revenue related to the delivered products or services only if:

o Any undelivered products or services are not essential to the functionality of
the delivered products or services;

o Payment for the delivered products or services is not contingent upon delivery
of the remaining products or services;

o We have an enforceable  claim to receive the amount due in the event we do not
deliver the undelivered products or services and it is probable that such amount
is collectible;

o There is  evidence of the fair value for each of the  undelivered  products or
services;

o Delivery of the delivered element represents the culmination of the earnings
process.

     The following are the specific revenue recognition  policies for each major
category of revenue.

SaaS Services
-------------

We provide  transactional  data  processing  services  through our SaaS software
solutions to our  customers.  The customer is charged a monthly  fixed rate on a
per  transaction  basis or a fixed fee  based on  monthly  transaction  volumes.
Revenue is recognized as the services are performed.

Custom Engineering Services
---------------------------

We perform custom engineering  services which are single contractual  agreements
involving  modification  or  customization  of the  Company's  proprietary  SaaS
software  solution.  Progress  is  measured  using the  relative  fair  value of
specifically identifiable output measures (milestones). Revenue is recognized at

                                       15
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

the lesser of the milestone  amount when the customer accepts such milestones or
the percentage of completion of the contract following the guidance of SOP 81-1,
"Accounting for  Performance of  Construction-Type  and Certain  Production Type
Contracts."

Cost of Revenue
---------------

Cost of  revenue in the  condensed  consolidated  statements  of  operations  is
presented along with operations, research and development costs and exclusive of
amortization and depreciation  shown  separately.  Custom  Engineering  Services
costs  related to  uncompleted  milestones  are  deferred  and included in other
current assets, when applicable.

Allowance For Doubtful Accounts
-------------------------------

The  allowance  for doubtful  accounts  reflects  management's  best estimate of
probable  losses  inherent  in  the  account  receivable   balance.   Management
determines  the  allowance   based  on  known  troubled   accounts,   historical
experience,  and other  currently  available  evidence.  At March  31,  2009 and
December 31, 2008, an allowance for doubtful  accounts is not provided since, in
the opinion of management, all accounts are deemed collectible.

Impairment of Long-Lived Assets
-------------------------------

Statement of Financial  Accounting  Standards ("SFAS"),  No. 144 "Accounting for
the Impairment or Disposal of Long-Lived Assets" ("FAS 144") requires management
judgments  regarding the future  operating and disposition  plans for marginally
performing assets, and estimates of expected  realizable values for assets to be
sold. The Company accounts for its long-lived  assets in accordance with FAS 144
for purposes of  determining  and measuring  impairment of its other  intangible
assets. It is the Company's policy to periodically  review the value assigned to
its long lived assets,  including  capitalized  software  costs, to determine if
they have been  permanently  impaired by adverse  conditions.  If  required,  an
impairment  charge would be recorded  based on an estimate of future  discounted
cash flows. In order to test for recoverability, the Company compared the sum of
an undiscounted  cash flow projection from the related  long-lived assets to the
net  carrying  amount  of  such  assets.  Considerable  management  judgment  is
necessary to estimate  undiscounted  future operating cash flows and fair values
and,  accordingly,  actual results could vary significantly from such estimates.
No impairment  charges were  recognized  during the three months ended March 31,
2009 and 2008, respectively.

Income Taxes
------------

We currently have significant deferred tax assets. SFAS No. 109, "Accounting for
Income Taxes"("FAS 109"),  requires a valuation allowance be established when it
is more likely than not that all or a portion of deferred tax assets will not be
realized.  Furthermore, FAS 109 provides that it is difficult to conclude that a
valuation  allowance  is not needed  when  there is  negative  evidence  such as
cumulative losses in recent years. Therefore, cumulative losses weigh heavily in
the overall  assessment.  The future  realization  of a portion of our  reserved
deferred  tax assets  related to tax  benefits  associated  with the exercise of
stock  options,  if and when  realized,  will not result in a tax benefit in the
consolidated  statement of operations,  but rather will result in an increase in
additional  paid in capital.  We will  continue  to  re-assess  our  reserves on
deferred income tax assets in future periods on a quarterly basis (see note 9 to
the Condensed Consolidated Financial Statements).

Use of Estimates
----------------

In preparing  financial  statements in  conformity  with  accounting  principles
generally  accepted  in the  United  States of  America,  our  management  makes
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and disclosures of contingent  assets and liabilities at the date of
the  consolidated  financial  statements,  as well as the  reported  amounts  of
revenue and expenses during the reporting period.  Certain items,  among others,
that are  particularly  sensitive to estimates  are revenue  recognition,  stock
based  compensation,  fair  value  of  warrant  liabilities  and  the  valuation
allowance  on  deferred  tax  assets.  Actual  results  could  differ from those
estimates.

                                       16
<PAGE>
                      DIRECT INSITE CORP. AND SUBSIDIARIES

Results of operations

For the three  months  ended  March 31, 2009 we had income  from  operations  of
$248,000  compared to income  from  operations  of $57,000 for the three  months
ended March 31,  2008.  We had net income of $248,000 for the three months ended
March 31, 2009,  compared to net income of $2,912,000 for the three months ended
March 31, 2008.  During the three  months  ended March 31,  2008,  we recorded a
benefit from income taxes of  $2,867,000  as a result of reducing the  valuation
allowance on our deferred tax assets for net operating  loss  carry-forwards  we
more likely than not expect to utilize in future years.

For the three months ended March 31, 2009 revenue increased  $340,000 (17.4%) to
$2,294,000,  compared to revenue of $1,954,000  for the three months ended March
31, 2008.  This increase is primarily the result of an increase in our recurring
SaaS IOL services revenue of $404,000 (22.1%)  resulting from an increase in our
services  to EDS and  other  customers,  offset  by a  decrease  in  engineering
services  revenue of $64,000  (51.2%) for the three  months ended March 31, 2009
compared to the three months ended March 31, 2008, principally due to a decrease
in engineering services revenue from EDS.

Costs of  operations,  research and  development  increased by $41,000 (5.0%) to
$866,000  for the three  months  ended  March  31,  2009,  compared  to costs of
$825,000  for the  three  months  ended  March 31,  2008.  These  costs  consist
principally   of  salaries  and  related   expenses  for  software   developers,
programmers,  custom  engineers,  network  services,  and  quality  control  and
assurance.  Also included are cost for purchased services,  network costs, costs
of the production  co-location  facility and other expenses  directly related to
our custom  engineering  and SaaS production  services.  The increase in 2009 is
principally  due to an increase in the cost of  purchased  services of $198,000,
due to outsourcing  certain services in support of a new IOL product offering to
one  customer.  This  increase  was offset by a decrease in salaries and related
costs of $121,000,  a decrease in purchased software and supplies of $34,000 and
a decrease in travel  costs of  $15,000.  Other  costs of  operations  increased
$13,000.

Sales and marketing costs increased  $133,000  (63.3%) to $343,000 for the three
months ended March 31,  2009,  compared to costs of $210,000 for the same period
in 2008. The increase is due to an increase in personnel costs of $116,000,  and
an  increase  in the costs for trade  shows of $19,000  offset by a decrease  in
other costs of $2,000.  The increase in personnel  costs is primarily due to the
addition of personnel and the  reassignment of personnel from other  departments
in support of new and continuing clients.

General and  administrative  costs decreased  $46,000 (5.9%) to $740,000 for the
three months  ended March 31,  2009,  compared to costs of $786,000 for the same
period in 2008.  The decrease is  principally  due to a decrease in salaries and
related benefit costs of $46,000 primarily in a reduction of stock  compensation
costs, a decrease in professional fees of $20,000, a decrease in travel costs of
$20,000  and a decrease  in other  expenses  of  $45,000.  This was offset by an
increase in legal and  accounting  fees of $54,000 due to costs  incurred  for a
registration   statement  and  an  increase  in  consultants   fees  of  $32,000
principally for the  implementation of Sarbanes-Oxley Act Section 404. All other
administrative costs decreased $1,000 compared to the same period in 2008.

Amortization  and  depreciation  expense was $97,000 for the three  months ended
March 31, 2009, and increase of $21,000 (27.6%) over the cost of $76,000 for the
same period in 2008.  The increase is due to the  purchase of equipment  for our
second  collocation  date center  facility in late 2008 and the  purchase of new
accounting software in 2008.

Other income for the three months ended March 31, 2009 consists of the change in
the fair value of the warrant liability of $21,000.

Interest  expense,  net was $6,000 for the three  months  ended  March 31,  2009
compared to interest  expense,  net of $12,000 for the same period in 2008.  The
decrease is due to terminating the receivables  financing  agreement that we had
in place in 2008. As a result of generating  positive cash flows from operations
we determined that this borrowing agreement was no longer needed.

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Financial Condition and Liquidity

Cash provided by operating  activities for the three months ended March 31, 2009
was $267,000  compared to cash provided by operating  activities of $187,000 for
the three months ended March 31, 2008. This consisted of net income of $248,000,
increased by non-cash  income and expenses of $225,000,  including  depreciation
and amortization of property and equipment of $97,000,  stock-based compensation
expense of $149,000 and the change in the fair value of the warrant liability of
($21,000).  In addition accounts receivable decreased by $8,000. This was offset
by an increase in prepaid expenses of $50,000 and a decrease in accounts payable
and accrued expenses of $164,000.

Cash used in  investing  activities  was $7,000 for the three months ended March
31,  2009,  compared to $89,000 for same  period in 2008.  This was  principally
expenditures for equipment.

Cash used in  financing  activities  totaled  $67,000 for the three months ended
March 31, 2009,  compared to cash used in financing  activities  of $806,000 for
the three  months  ended  March 31,  2008.  We paid  $124,000  in  dividends  on
preferred  stock  and  repaid  $43,000  of  long-term  debt  and  capital  lease
obligations in the first three months of 2009 and we received  proceeds from the
exercise of warrants of $100,000.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have, or are reasonably likely to
have,  a current or future  effect on our  financial  condition,  changes in our
financial  condition,  revenues or expenses,  results of operations,  liquidity,
capital expenditures or capital resources that are material to investors.


Item 3. Quantitative and Qualitative Disclosure About Market Risk

     Not applicable

Item 4T. Controls and Procedures

     Evaluation of Disclosure Controls and Procedures
     -------------------------------------------------

     The Company maintains disclosure controls and procedures designed to ensure
     that information  required to be disclosed in the reports it files with the
     SEC is accumulated and communicated to management, as appropriate, to allow
     timely decisions  regarding  required  disclosure,  and such information is
     recorded,  processed,  summarized  and  reported  within  the time  periods
     specified in the SEC's rules and forms.  Under the supervision and with the
     participation of our management,  including our Chief Executive Officer and
     Chief  Financial  Officer,  we  have  evaluated  the  effectiveness  of our
     disclosure  controls  and  procedures  as such term is defined by the rules
     established under the Securities Exchange Act of 1934.

     Based  on our  evaluation  which  took  place  as of March  31,  2009  (the
     "Evaluation  Date"), we believe that these procedures were not effective as
     a result  of  limited  resources  and a  limited  segregation  of duties in
     accounting and financial  reporting.  More specifically,  the Company has a
     limited  number  of  personnel  in the  finance  and  accounting  area  and
     therefore one person performs various accounting  functions where a greater
     segregation  of duties  would  permit  checks and balances and reviews that
     would improve internal control. The Company has been aware of this material
     weakness  since  January  2004 at which  time the  staff of the  accounting
     department was reduced.  As a result the Chief  Financial  Officer  devotes
     substantive time to reviewing the accounting  records and financial reports
     and the Company expects that this will continue until  financial  resources
     permit engaging additional accounting staff. The Company has not determined
     at this time when such additional staff will be employed.

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                      DIRECT INSITE CORP. AND SUBSIDIARIES


     Changes in Internal Control Over Financial Reporting
     ----------------------------------------------------

     The Company  maintains a system of  internal  controls  designed to provide
     reasonable  assurance  that  transactions  are executed in accordance  with
     management's general or specific  authorization;  transactions are recorded
     as  necessary  to  (1)  permit  preparation  of  financial   statements  in
     conformity  with  accounting  principles  generally  accepted in the United
     States of America,  and (2) maintain  accountability for assets.  Access to
     assets  is  permitted  only in  accordance  with  management's  general  or
     specific  authorization.  In 2007 the Company  adopted and  implemented the
     control  requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the
     "Act").

     There  was no change  in the  Company's  internal  control  over  financial
     reporting  during the  Company's  last fiscal  quarter that has  materially
     affected,  or is  reasonably  likely to  materially  affect,  the Company's
     internal control over financial reporting.

     It is the  responsibility  of the  Company's  management  to establish  and
     maintain adequate internal control over financial  reporting.  However, due
     to its limited financial  resources,  there is only limited  segregation of
     duties within the accounting function,  leaving most significant aspects of
     financial reporting in the hands of the CFO.

     Our  independent  auditors have reported to our Board of Directors  certain
     matters  involving   internal   controls  that  our  independent   auditors
     considered to be a reportable  condition and a material  weakness as of the
     Evaluation  Date,  under  standards   established  by  the  Public  Company
     Accounting  Oversight Board. As previously stated, the reportable condition
     and  material  weakness  relates to limited  segregation  of duties and the
     absence  of  reviews  and  approvals  beyond  that  performed  by the Chief
     Financial  Officer as  mentioned  above,  of  transactions  and  accounting
     entries.

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                      DIRECT INSITE CORP. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION






Item 6. Exhibits


     31   Certifications  pursuant  to Rules  13a-14(a)  as adopted  pursuant to
          Section 302 of the Sarbanes-Oxley Act of 2002.

     32   Certifications  pursuant to 18 U.S.C. Section 1350 as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.


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                      DIRECT INSITE CORP. AND SUBSIDIARIES

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
     registrant  has duly  caused  this report to be signed on its behalf by the
     undersigned, thereunto duly authorized.




DIRECT INSITE CORP.




/s/  James A. Cannavino
-------------------------------------------
James A. Cannavino, Chief Executive Officer                May 13, 2009



/s/ Michael J. Beecher
-------------------------------------------
Michael J. Beecher, Chief Financial Officer                May 13, 2009